FEDERAL EMPLOYEES. Opportunities Exist to Strengthen Performance Management Pilot. Report to Congressional Requesters

United States Government Accountability Office Report to Congressional Requesters September 2013 FEDERAL EMPLOYEES Opportunities Exist to Strengthen Performance Management Pilot GAO-13-755

September 2013 FEDERAL EMPLOYEES Opportunities Exist to Strengthen Performance Management Pilot Highlights of GAO-13-755, a report to Congressional Requesters Why GAO Did This Study A longstanding challenge for federal agencies has been developing credible and effective performance management systems that can serve as a strategic tool to drive internal change and achieve results. In 2011, various federal agencies, labor unions, and other organizations developed the Goals-Engagement-Accountability- Results (GEAR) framework to help improve performance management. GAO was asked to evaluate GEAR. This report (1) analyzes how the GEAR framework addresses key practices for effective performance management and identifies opportunities to improve GEAR implementation governmentwide; (2) describes the status of GEAR implementation at pilot agencies and lessons learned to date; and (3) assesses the extent to which each pilot agency s GEAR implementation plan includes selected best practices for project planning. The report is based on GAO s analysis of GEAR documents, agency project plans, and interviews with agency officials. What GAO Recommends As GEAR is adopted government-wide, GAO recommends that the Director of OPM, in collaboration with the CHCO Council, define roles and responsibilities for OPM, the CHCO Council, and individual agencies, in such areas as updating the toolkit (as needed) and disseminating information on GEAR more broadly. GAO also recommends that OPM, Coast Guard, HUD, and NCA update their GEAR project plans to be consistent with best practices for project planning. OPM, DHS, HUD, and VA agreed with the recommendations. View GAO-13-755. For more information, contact Robert Goldenkoff, (202) 512-6806, or goldenkoffr@gao.gov What GAO Found GAO found that the GEAR framework generally addresses previously identified key practices for effective performance management, such as aligning individual performance expectations with organizational goals, but refinements could improve future government-wide implementation. Five federal agencies are piloting GEAR the Departments of Energy (DOE), Homeland Security/Coast Guard (DHS/Coast Guard), Housing and Urban Development (HUD), Veterans Affairs/National Cemetery Administration (VA/NCA), and the Office of Personnel Management (OPM) with the intention to expand GEAR government-wide. The Chief Human Capital Officers Council (CHCO Council) is developing a toolkit based, among other things, on the experience of the pilot agencies. The toolkit is intended to help additional agencies implement the GEAR framework; CHCO Council representatives expect the toolkit to be complete by the end of September 2013. However, beyond the toolkit, neither the CHCO Council nor OPM have identified next steps to implement GEAR government-wide, such as identifying roles and responsibilities. Further, neither OPM nor the CHCO Council has plans to regularly update the GEAR framework or toolkit to include additional lessons learned, or to make such information available more broadly to key stakeholders, such as human resource professionals who may be responsible for future implementation. Without taking these steps, agencies that have already begun implementing GEAR risk losing their momentum; in addition, it may be challenging to implement GEAR government-wide. The five pilot agencies adopted various approaches to implementing GEAR DOE, HUD, and OPM implemented GEAR agency-wide, while Coast Guard and NCA adopted GEAR in single units based on agency needs, available resources, and GAO s lessons learned to date. For example, early stakeholder involvement, including engagement between those representing labor and management, resulted in greater transparency and fewer obstacles. In addition, administering employee surveys to identify the greatest needs before implementing GEAR helped establish a baseline to better track results. Each of the pilot agencies developed a GEAR project plan that outlined specific actions. DOE s GEAR plan was the most thoroughly documented. The other four agency plans did not include all project planning best practices, as shown in the table below. Without these elements, agencies may be limited in their ability to determine what needs to be done, when it should be done, who should do it, and how to measure progress towards achieving objectives. Some Agencies GEAR Project Plans Were More Complete Than Others Extent to which plans included project planning good practices Agency Objectives Specific actions Roles and responsibilities Schedules Performance measures Coast Guard Yes Yes Yes Partially a No DOE Yes Yes Yes Yes Yes HUD No Yes No Yes Yes NCA Yes Yes Partially a Partially a No OPM No Yes No Yes Yes Source: GAO analysis. a GAO assessed an agency s plan as partially including a best practice if it included limited information on a specific best practice but did not do so consistently throughout the plan. United States Government Accountability Office

Contents Letter 1 Background 4 The GEAR Framework Generally Addresses Key Performance Management Practices; Refinements Could Improve Future Government-wide Implementation 8 Pilot Agencies Adopted Various Approaches to Implementing GEAR; Opportunities Exist to Capture Lessons Learned 14 Some Agencies GEAR Project Plans Were More Complete than Others 18 Conclusion 27 Recommendations for Executive Action 28 Agency Comments and Our Evaluation 29 APPENDIX I Objectives, Scope, and Methodology 31 Appendix II Comments from the Office of Personnel Management 34 Appendix III Comments from the Department of Homeland Security 36 Appendix IV Comments from the Department of Veterans Affairs 38 Appendix V GEAR Implementation Approach for the Department of Homeland Security/Coast Guard 40 Appendix VI GEAR Implementation Approach for the Department of Energy 44 Appendix VII GEAR Implementation Approach for the Department of Housing and Urban Development 48 Page i

Appendix VIII GEAR Implementation Approach for the Dept. of Veterans Affairs National Cemetery Administration 51 Appendix IX GEAR Implementation Approach for the Office of Personnel Management 54 Appendix X GAO Contact and Staff Acknowledgements 57 Tables Table 1: GEAR Generally Addresses Key Practices for Effective Performance Management 8 Table 2: Estimated Number of Employees Affected by GEAR and Estimated Timeline for Implementation at the Pilot Agencies 15 Table 3: Agencies GEAR Project Plans Included Varying Levels of Detail20 Table 4: Coast Guard s GEAR Project Plan Does Not Include Performance Measures 20 Table 5: DOE s GEAR Project Plan Meets All Selected Best Practices 22 Table 6: HUD s GEAR Project Plan Does Not Include Objectives or Roles and Responsibilities 23 Table 7: NCA s GEAR Project Plan Does Not Include Schedules or Performance Measures 24 Table 8: OPM s GEAR Project Plan Does Not Include Objectives or Roles and Responsibilities 26 Table 9: GEAR Implementation Status According to the Department of Homeland Security s Coast Guard as of July 2013 41 Table 10: GEAR Implementation Status According to the Department of Energy as of July 2013 46 Table 11: GEAR Implementation Status According to the Department of Housing and Urban Development as of July 2013 49 Page ii

Table 12: GEAR Implementation Status According to the Department of Veterans Affairs National Cemetery Administration as of July 2013 52 Table 13: GEAR Implementation Status According to the Office of Personnel Management as of July 2013 55 Page iii

Abbreviations AFGE CHCO Council DHS DOE FEVS GEAR GS HCF HUD LMAC LMR Council MSN NCA OMB OPM PAAT PIO SES VA WBS WG American Federation of Government Employees Chief Human Capital Officers Council Department of Homeland Security Department of Energy Federal Employee Viewpoint Survey Goals-Engagement-Accountability-Results general schedule Human Capital Framework Department of Housing and Urban Development Labor Management Advisory Committee National Council on Federal Labor- Management Relations Memorial Service Network National Cemetery Administration Office of Management and Budget Office of Personnel Management Performance Appraisal Assessment Tool Performance Improvement Officer Senior Executive Service Department of Veterans Affairs work breakdown structure wage grade This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. Page iv

441 G St. N.W. Washington, DC 20548 September 12, 2013 The Honorable Darrell Issa Chairman Committee on Oversight and Government Reform House of Representatives The Honorable Blake Farenthold Chairman Subcommittee on Federal Workforce, U.S. Postal Service and the Census Committee on Oversight and Government Reform House of Representatives In our past work we have noted how current budget and long-term fiscal pressures, combined with a potential wave of employee retirements, could produce gaps in leadership and institutional knowledge that could impair the ability of federal agencies to carry out their complex and evolving missions. 1 We concluded that effective performance management systems that link individual performance to organizational results will be key to mission success in this difficult environment. In 2011, representatives of various federal agencies, labor unions, and management organizations were brought together by the National Council on Federal Labor-Management Relations (LMR Council), in conjunction with the Chief Human Capital Officers Council (CHCO Council), to identify ways to reform and improve employee performance management in the federal government. 2 The resulting effort, the Goals-Engagement- Accountability-Results (GEAR) framework, is a set of five high-level recommendations intended to create high-performing organizations that 1 GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013). 2 The National Council on Federal Labor-Management Relations is an advisory committee established by Executive Order No. 13522 in 2009. It consists of the Director of the Office of Personnel Management and the Deputy Director for Management of the Office of Management and Budget (who serve as co-chairs), the chair of the Federal Labor Relations Authority, other federal officials, union officials from federal employee unions, and representatives of federal management organizations. Its purpose is to advise the President on matters involving executive branch labor-management relations and other activities related to improving federal labor-management partnerships, relations, and the delivery of government services. Creating Labor-Management Forums to Improve Delivery of Government Services, 74 Fed. Reg. 66203 (Dec. 9, 2009). Page 1

are aligned, accountable, and focused on results. 3 Five federal agencies are piloting GEAR, either agency-wide or in single units: the Department of Energy (DOE), the Department of Housing and Urban Development (HUD), the Department of Homeland Security/United States Coast Guard (DHS/Coast Guard), the Department of Veterans Affairs/National Cemetery Administration (VA/NCA), and the Office of Personnel Management (OPM). 4 You asked us to evaluate the GEAR framework. This report (1) analyzes how the GEAR framework addresses key practices for effective performance management and identifies opportunities, if any, to improve GEAR implementation government-wide; (2) describes the status of each pilot agency s GEAR implementation and any lessons learned to date; and (3) assesses the extent to which each agency s GEAR implementation plan includes selected best practices for project planning. To address our first objective, we systematically reviewed the GEAR report from the LMR Council to determine whether the goals, recommendations, and actions described in the document reflected key practices for effective performance management that we previously identified. 5 We verified that the key practices were applicable for purposes of this engagement by conducting a literature review of leading performance management practices and consulting with internal subject matter experts. In addition, we interviewed OPM officials and CHCO 3 Employee Performance Management Workgroup, Report to the National Council on Federal Labor-Management Relations, Goals Engagement Accountability Results: Getting in GEAR for Employee Performance Management (Revised November 2011). 4 For purposes of this report, we are referring to both departments and agencies as agencies. 5 GAO, Results-Oriented Cultures: Creating a Clear Linkage between Individual Performance and Organizational Success, GAO-03-488 (Washington, D.C.: March 14, 2003). These best practices were based on previously issued reports on public sector organizations approaches to reinforcing individual accountability for results. Page 2

Council officials who were members of the LMR Council work group that drafted the report. 6 To address our second objective, we obtained and analyzed each agency s GEAR implementation plan(s) and obtained and analyzed updates from the agencies and other documentation that identified their current GEAR implementation status. We developed an interview instrument to discuss agency strategies with human resource/human capital officials, program managers, and other officials responsible for GEAR implementation. We also interviewed labor union representatives about any problems or concerns with implementing the GEAR framework. In addition, in May 2013 we visited Coast Guard Base Boston, where we observed initial GEAR training sessions and interviewed supervisors and employees about their reactions to the training and the GEAR framework. We chose this site because the Coast Guard was the most recent of the five pilot agencies to implement GEAR and we were able to visit soon after the start of their implementation efforts. To address our third objective, we identified project planning best practices (drawn primarily from Standards for Internal Control in the Federal Government, GAO s definitions of performance measurement, and GAO s guide for best practices in project schedules) and assessed the inclusion of information contained in the agencies GEAR plans against the best practices. 7 We focused on the inclusion of the following best practices because they were relevant to GEAR: (1) plan objective(s) describing a goal; (2) specific actions needed to attain that goal; (3) roles and responsibilities identified and assigned to project stakeholders; (4) 6 The CHCO Council was established under the Chief Human Capital Officers Act of 2002, enacted as part of the Homeland Security Act of 2002, to advise and coordinate the activities of members agencies on such matters as the modernization of human resource systems, improved quality of human resource information, and legislation affecting human resource operations and organizations. The council includes 25 members drawn from the 15 executive departments and 8 additional agencies designated by OPM s director. The council is chaired by the OPM director; the Deputy Director for Management of the Office of Management and Budget is vice chair. See Pub. L. No. 107-296, 116 Stat. 2135, 2288 (Nov. 25, 2002), at 5 U.S.C. 1401 note. 7 GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999); Performance Measurement and Evaluation, GAO-11-646SP (Washington, D.C.: May 2011); and GAO Schedule Assessment Guide: Best Practices for project schedules, Exposure Draft GAO-12-120G (Washington, D.C.: May 2012). We included Exposure Draft GAO-12-120G as it presents ten best practices associated with developing and maintaining a reliable, high-quality schedule based on the planning process (the schedule is essentially a model of the project plan). Page 3

schedules containing logically related project elements leading to the goal; and (5) valid performance measures that permit comparison between desired outcomes and actual results. We assessed each agency s GEAR plan to determine the extent to which the information that was included met each of the five best practices. In cases in which plans provided inconsistent information, we used a rating of partially included. In addition, we noted strengths and areas for further attention in each plan. We conducted this performance audit from February 2013 to September 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Further details of our scope and methodology appear in Appendix I. Background A long-standing challenge for federal agencies has been developing credible and effective performance management systems that can serve as a strategic tool to drive internal change and achieve results. 8 According to OPM regulations, performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. 9 Performance management includes such actions as planning work and setting expectations, continually monitoring performance, developing the capacity to perform, periodically rating performance in a summary fashion, and rewarding good performance. In December 2009, the LMR Council was created to establish a cooperative and productive form of executive branch labor-management relations in an effort to improve the productivity and effectiveness of the federal government. 10 The LMR Council is co-chaired by the Director of 8 GAO-03-488. 9 5 C.F.R. 430.102(a). 10 Exec. Order No. 13522 (Dec. 9, 2009). The President extended the Council through September 30, 2013, in Exec. Order No. 13591, Continuance of Certain Federal Advisory Committees, 76 Fed. Reg. 74623 (Nov. 23, 2011). Page 4

the Office of Personnel Management (OPM) and the Deputy Director for Management of the Office of Management and Budget (OMB) with members representing executive branch departments and agencies, several labor unions, and other management associations. The LMR Council serves as an advisor to the President on matters involving executive branch labor-management relations; it also promotes partnership efforts between labor and management within the executive branch. For example, the order states that management should discuss workplace challenges and problems with labor and endeavor to develop solutions jointly, rather than advise union representatives of predetermined solutions to problems and then engage in bargaining over the impact and implementation of the predetermined solutions. In April 2011, the LMR Council, in conjunction with the CHCO Council, set out to examine the federal government s performance management accountability framework and to make recommendations for improvement. The CHCO Council supports OPM in the strategic management of human capital at federal agencies and provides a forum for senior management officials to exchange human resources best practices. 11 By May 2011, a work group was formed (with members representing various federal agencies, labor unions, and management organizations from both the LMR and CHCO Councils) to discuss ways to examine the existing system of employee performance management in ways that the work group felt were different from previous attempts that focused on actions such as increasing employee accountability through changes to regulations. The work group developed the GEAR report, issued in 2011, which identified challenges with the federal performance management system, such as a lack of evidence that the mechanical aspects of public and private sector performance management systems, such as rating levels and awards, do a good job of improving employee and organizational performance; and a disconnect among the various functions responsible for organizational performance improvement and employee performance 11 GAO, Federal Training Investments: Office of Personnel Management and Agencies Can Do More to Ensure Cost-Effective Decisions, GAO-12-878 (Washington, D.C.: Sept. 17, 2012). Page 5

improvement. For example, there were few formally structured opportunities for the individuals responsible for these functions to interact and communicate. As a result of identifying these challenges, according to the GEAR report, the work group agreed to focus on the relational elements of organizational and employee performance management, such as how to set clear expectations in work plans through frequent formal and informal feedback between supervisors and employees; and engage employees and agency managers, through their labor unions and CHCOs, and identify successful practices that have improved the selection and training of supervisors and the engagement between employees and supervisors such as two-way communication and continual informal feedback. The work group constructed the GEAR framework, as presented in the GEAR report, with the following recommendations: 1. Articulate a high performance culture. 2. Align employee and organizational performance management. 3. Implement accountability at all levels. 4. Create a culture of engagement. 5. Improve supervisor assessment, selection, development, and training. OPM officials told us that the practices in the GEAR report are well known and credible but not universally applied in federal agencies. 12 According to an OPM senior official, the GEAR recommendations are common sense but not common practice. The same official noted that the GEAR recommendations align with current regulations addressing federal performance management, but that GEAR adds specific strategic and 12 For example, OPM regulations for Senior Executive Service (SES) performance management systems require such systems to expect excellence in SES performance and link individual performance management with organizational goals. 5 C.F.R. 430.301. Page 6

technical guidance and communication strategies. 13 Agency officials said that combining the recommendations into one framework can aid officials in maintaining focus and attention on improving performance management in the context of competing priorities. The GEAR recommendations and framework were presented to and accepted by the LMR Council in November 2011. By December 2011, five agencies had volunteered to implement the GEAR framework. Of these, three agencies DOE, HUD, and OPM implemented GEAR agency-wide with few exceptions. Two agencies Coast Guard and NCA implemented GEAR in single units. The agencies all created GEAR implementation plans and periodically met as a group to discuss strategies and challenges, and to share successes and additional training opportunities throughout implementation. The pilot agencies also periodically reported their progress to both the LMR and CHCO Councils. No additional agencies have volunteered to pilot GEAR. However, in Analytical Perspectives: Performance and Management section in the President s Budget for Fiscal Year 2014, there is a stated goal of broader application of the GEAR framework across the federal government, with 14 no stated timeframe for completion. 13 5 C.F.R. part 430. 14 Office of Management and Budget, Fiscal Year 2014 Analytical Perspectives: Budget of the U.S. Government (Washington, D.C.: 2013). Page 7

The GEAR Framework Generally Addresses Key Performance Management Practices; Refinements Could Improve Future Government-wide Implementation The GEAR Framework Generally Addresses Key Performance Management Practices We have previously identified a set of key practices for modern, effective performance management, which appear with summary descriptions in table 1. 15 Our current review found that the GEAR framework generally addressed seven of these key practices, but it does not give clear attention to two other practices. Table 1: GEAR Generally Addresses Key Practices for Effective Performance Management Key practice Align individual performance expectations with organizational goals. An explicit alignment helps individuals see the connection between their daily activities and organizational goals. Connect performance expectations to crosscutting goals. Placing an emphasis on collaboration, interaction, and teamwork across organizational boundaries helps strengthen accountability for results. Provide and routinely use performance information to track organizational priorities. Individuals use performance information to manage during the year, identify performance gaps, and pinpoint improvement opportunities. GEAR example GEAR reflects this practice. GEAR recommends that agencies drive ongoing alignment and cascading of established organizational performance objectives down through executive, manager, supervisor, and employee performance goals. GEAR does not clearly reflect this practice. LMR work group members told us that agencies crosscutting goals would be subsumed under more general agency and individual performance goals. GEAR reflects this practice. GEAR recommends that agencies use metrics at all organizational levels to verify goal achievement and accountability for employees and supervisors. 15 GAO-03-488. Page 8

Key practice Require follow-up actions to address organizational priorities. By requiring and tracking follow-up actions on performance gaps, organizations underscore the importance of holding individuals accountable for making progress on their priorities. Use competencies to provide a fuller assessment of performance. Competencies define the skills and supporting behaviors that individuals need to effectively contribute to organizational results. Link pay to individual and organizational performance. Pay, incentive, and reward systems that link employee knowledge, skills, and contributions to organizational results are based on valid, reliable, and transparent performance management systems with adequate safeguards. Make meaningful distinctions in performance. Effective performance management systems strive to provide candid and constructive feedback and the necessary objective information and documentation to reward top performers and deal with poor performers. Involve employees and stakeholders to gain ownership of performance management systems. Early and direct involvement helps increase employees and stakeholders understanding and ownership of the system and belief in its fairness. Maintain continuity during transitions. Because cultural transformations take time, performance management systems reinforce accountability for change management and other organizational goals. GEAR example GEAR reflects this practice. GEAR recommends that agencies develop semi-annual reports to determine effectiveness and program efficiency, and that senior executives also meet semiannually to review progress and determine needed actions on identified issues and/or problems. GEAR reflects this practice. GEAR recommends agencies improve their feedback culture within their performance management systems, such as simplifying existing performance management processes to make them meaningful with specific linkages to agency mission, goals, and/or strategies. GEAR does not reflect this practice. LMR work group members told us that GEAR does not specifically address pay for performance because Congress controls pay. GEAR reflects this practice. GEAR recommends that agencies discuss and set standards that clearly differentiate among levels of performance. GEAR reflects this practice. GEAR recommends working with labor-management forums, groups of supervisors, and management organizations. GEAR reflects this practice. GEAR recommends regular succession assessments for supervisory positions at risk. Source: GAO analysis of GEAR report. As shown in table 1, two practices connecting performance expectations to crosscutting goals, and linking pay to organizational performance do not receive clear attention in the GEAR framework. LMR work group members who helped to draft the GEAR report told us they did not specifically discuss agency crosscutting goals during the drafting and instead, focused on aligning employee and organizational performance management. However, they also told us that GEAR does not deter agencies from connecting performance expectations to crosscutting goals, and that they felt that crosscutting goals would be subsumed under individual and agency performance goals, as appropriate. OPM officials agreed that connecting performance expectations to crosscutting goals is essential to improving performance across the federal government. In addition, these same LMR work group members said that they excluded linking pay to performance because Congress authorizes pay. Congress is responsible for authorizing pay-for-performance plans, and Page 9

tools to reward good performance with pay are increasingly limited in the federal government. They said that the GEAR report suggests appropriate action for both good and poor performance and that use of pay-for-performance could be understood as such an action. According to the GEAR report, effective, and productive relationships between managers and employees are necessary for performance improvements. The greater an employee s level of engagement, the more likely he or she is to go beyond the minimum required. GEAR emphasizes promoting employee-supervisor engagement through continual informal feedback and frequent (up to four times per year) formal feedback. Beyond the establishment of competencies and aligned goals, GEAR recommends frequent interaction and accountability both for supervisors and employees based on measurable goals. The GEAR report also recommends that agencies improve the assessment, selection, development, and training of supervisors, emphasizing that agencies should select and assess supervisors based on supervisory and leadership proficiencies, rather than technical competencies, and should hold them accountable for performance of supervisory responsibilities. In addition, GEAR emphasizes the need to hold supervisors accountable for providing feedback, documenting performance discussions, and holding poorly-performing employees accountable. According to the GEAR report, focusing on accountability of managers and supervisors helps to ensure continual, effective communication and to make performance management a daily feature of work. Senior officials at three of the pilot agencies reported that supervisors sometimes say there is not enough time for supervisory responsibilities. For example, officials at DOE and HUD said that supervisors sometimes see their supervisory responsibilities as secondary to programmatic responsibilities and may not allocate sufficient time to set clear expectations or provide frequent feedback to employees. As part of improving supervision, GEAR recommends greater integration between the agency units dealing with organizational performance and those dealing with individual employee performance. Specifically, GEAR proposes greater integration between the CHCO and Performance Improvement Officer (PIO) functions to improve overall program execution, either through creation of a Performance Management Integration Board or through continuous communication so that the Page 10

functions work in tandem. 16 Similarly, GEAR emphasizes long-term integration of performance management into agency functions. For example, it recommends mentoring to ensure general organizational continuity, continual planning and assessment to ensure continued focus on personnel management and high performance, and targeted training and development programs to ensure agencies will have qualified supervisors and be able to fill other critical occupations. We have previously concluded that integrating human capital planning with broader organizational strategic planning is essential for ensuring that agencies have the talent and skill mix needed to cost-effectively execute their mission and program goals. 17 OPM and CHCO Council Have Not Fully Defined their Roles for Implementing GEAR Government-wide While OPM and the CHCO Council have been supportive of the pilot effort to date, neither entity has identified their specific respective roles or responsibilities for achieving the current administration s goal of implementing GEAR more broadly across the federal government going forward. Clearly defined roles and responsibilities will be important for maintaining the momentum of the pilot, sharing the pilot effort s lessons learned, and encouraging additional agencies to implement the GEAR framework. OPM has taken several steps to help the pilot agencies implement GEAR. For example, OPM officials have facilitated conversations among the pilot agencies to share information and lessons learned, and have made webbased training on performance management available to federal agencies at no cost. 18 According to OPM officials, OPM, as co-chair of the CHCO Council, will provide leadership and direction for the government-wide implementation of GEAR, but the future of GEAR will be determined by 16 The PIO role was created by a 2007 executive order and established in law and elevated by the GPRA Modernization Act of 2010, which stated that it should be given to a senior executive at each agency who reports directly to each agency s chief operating officer. The duties of the PIO include advising the agency head and chief operating officer on goal-setting and measurement, reviewing progress toward agency priority goals, and assisting in the development and use of performance measures in personnel performance appraisals and other personnel processes and assessments as appropriate. 17 GAO, Human Capital Management: Effectively Implementing Reforms and Closing Critical Skills Gaps Are Key to Addressing Federal Workforce Challenges, GAO-12-1023T (Washington, D.C: Sept. 19, 2012). 18 The suite of web-based performance management courses were developed by the Office of the Director of National Intelligence. Page 11

the CHCO Council as a whole and not by OPM alone. They noted that the GEAR framework is intended to be flexible and thus did not want to mandate how agencies should implement it. CHCO Council officials agreed that the framework provides flexibility to the agencies; however, the same CHCO officials also cited the need for some standardization of GEAR metrics to ensure accountability among agencies. As noted, in Analytical Perspectives: Performance and Management of the President s Budget for Fiscal Year 2014, the CHCO Council is currently reviewing the progress of GEAR and lessons learned in these agencies and identifying other leading practices across the Federal sector and private sector with the goal of broader application of the GEAR framework across the Federal Government. 19 For its part, the CHCO Council is reviewing the pilot agencies implementation of GEAR with an eye toward identifying promising practices. Specifically, CHCO Council officials told us that an internal work group is identifying promising practices and metrics that, when combined, may provide additional guidance in the form of a diagnostic toolkit to assist agencies in implementing the GEAR framework. According to CHCO Council work group members, a toolkit is needed because the GEAR recommendations were high-level in nature, and the report itself did not include practical guidance. For example, an agency may want to implement GEAR s recommendation to create a culture of engagement, but the GEAR report provided limited guidance on how to do so. According to a CHCO Council work group member, the diagnostic toolkit will enable agencies to identify their level of maturity on a scale by analyzing the results of the Federal Employee Viewpoint Survey (FEVS), the Human Capital Framework (HCF), the non-ses Performance Appraisal Assessment Tool (PAAT), and the SES certification process. Federal agencies can use these tools to measure whether, and to what extent, conditions characterizing successful organizations are present in federal agencies (FEVS); to assist officials in achieving results in personnel management programs (HCF); and to assess agencies performance appraisal systems and develop plans and strategies for making improvements (non-ses PAAT and SES certification process). 19 OMB, FY 2014 Analytical Perspectives (Washington, D.C.: 2013). Page 12

From this, agencies can use the results to identify a range of promising practices that the agency may choose from, based on identified resources and needs. According to the same CHCO Council work group members, these promising practices align with the five GEAR recommendations and reflect a range of initiatives (compiled from both public and private sector efforts, as well as pilot agencies experiences), that provide options for agencies based on their specific needs. The CHCO Council s subgroups plan to complete the diagnostic toolkit by August 2013 and to present the final product to the CHCO Council by the end of September 2013. However, beyond its completion in September 2013, the CHCO Council has no stated plans to update the toolkit, such as collecting lessons learned on an ongoing basis from the pilot agencies, or including additional promising practices as needed. Without gathering information from the pilot agencies as they continue their implementation process, valuable information that could help agencies implement GEAR in the future may be lost. While the toolkit shows promise for refining the future implementation of GEAR, its utility in this regard could be limited because neither the CHCO Council nor OPM have stated plans to broadly disseminate it. CHCO Council officials told us that the completed diagnostic toolkit will be presented to the entire CHCO Council but there is no plan to share that information on a broader basis, which would be consistent with the Administration s goal to more broadly implement GEAR government-wide. CHCO Council officials stated that it was OPM s responsibility to determine the future of the diagnostic toolkit. One vehicle for disseminating the toolkit s information more broadly could be the OMB Max Federal Community Website where OPM officials have already posted informational material on GEAR and where pilot agencies can add their own information and experiences. 20 Without making such information more widely available, front-line managers, supervisors, representatives of labor unions, and other federal human capital stakeholders may not have access to information that could improve employee engagement. Moving forward, it will be important for both OPM and the CHCO Council to agree upon their specific roles and responsibilities if the goal of broader 20 The MAX Federal Community is used by the Office of Management and Budget and federal agencies to share information and collaborate. Although all individuals with.gov,.mil, or fed.us in their e-mail address can create an account and access most of the OMB Max Federal Community, only executive branch employees are able to view GEAR information posted on the website by pilot agencies. Page 13

application of the GEAR framework government-wide is to be realized. Once specific roles and responsibilities have been established going forward, plans may be made to update the GEAR framework and diagnostic toolkit as needed and to broadly disseminate the information so that stakeholders government-wide who are already implementing GEAR (or may implement in the future) will have access to the most recent guidance available. Pilot Agencies Adopted Various Approaches to Implementing GEAR; Opportunities Exist to Capture Lessons Learned Pilot Agencies Adopted Various Approaches to Implementing GEAR The five pilot agencies adopted various approaches to implementing all five of the GEAR recommendations based on their needs and available resources. The GEAR report provides agencies with a framework focused on feedback, employee-supervisor engagement, and improving supervision; it gives agencies the flexibility to implement as they see fit. Thus, three of the five agencies DOE, HUD, and OPM implemented GEAR agency-wide, while two agencies Coast Guard and NCA established pilots in single units. DOE, HUD, and OPM officials all said that the project had the best chance of changing the organizational culture if they implemented it agency-wide. For example, HUD officials said they felt that implementing GEAR agency-wide would permit it to be better embedded in the performance culture. An OPM official said that GEAR focused attention on previously identified human capital needs, such as supervisor assessment, that had not been addressed due to limited resources and competing priorities. VA is implementing GEAR within its NCA agency as a single unit pilot in its Memorial Service Network (MSN) II in the southeastern region of the country. According to VA officials, VA chose the NCA because it has a reputation as a high-performing organization and an existing focus on metrics and feedback. NCA officials said they chose to implement GEAR Page 14

as a single unit, rather than agency-wide, because doing so allowed them to provide closer attention and support. The Coast Guard is implementing GEAR at Base Boston, which, according to officials, was chosen as the pilot site for several reasons: the presence of both general schedule (GS) and wage grade (WG) employees (who happen to be supervised by both military and civilian personnel) a wide variety of occupations, and the representation of a single union the American Federation of Government Employees (AFGE) rather than the multiple unions that are present at other Coast Guard bases. 21 Coast Guard officials said they chose to pilot GEAR at a single unit because implementation brought challenges such as dealing with such a large military population (approximately 42,000 military personnel that rotate bases approximately every two to three years and operate on a different performance management plan compared with approximately 9,000 civilian employees) and negotiating with approximately nine unions. According to one Coast Guard official, to develop more than one site would create a capacity issue that would make it very difficult to plan and implement. Table 2 shows how many employees will be covered by GEAR at each agency, as well as each agency s time frame for implementation. Additional information on the actions taken by each agency is included in appendices V-IX. Table 2: Estimated Number of Employees Affected by GEAR and Estimated Timeline for Implementation at the Pilot Agencies Agency Coast Guard Base Boston Approximate number of employees affected Estimated start date for pilot implementation Estimated pilot completion date 200 April 2013 March 2014 Department of Energy 8,400 March 2012 Early 2014, but expect to maintain indefinitely 21 The Classification Act of 1949 established the General Schedule, a single, nationwide pay structure for federal employees that today consists of 15 pay grades, each with 10 pay steps. Most white-collar federal employees are paid under the General Schedule. Wage grade employees are paid under the Federal Wage System, which is a coordinated wage system for federal employees in trade, craft, and labor occupations. Page 15

Agency Department of Housing and Urban Development National Cemetery Administration, Memorial Service Network II Office of Personnel Management Approximate number of employees affected Estimated start date for pilot implementation Estimated pilot completion date 8,100 January 2012 September 2013 240 October 2012 2016 5,800 December 2011 Through September 2013 Source: GAO analysis of pilot agency plans. Each of the agencies said they had engaged labor unions during GEAR implementation. Of the agencies that mentioned the results of their engagement, DOE officials said that prior to launching the pilot, the Office of the Chief Human Capital Officer briefed the local unions that cover their employees, but received no feedback. In contrast, NCA officials said that the two unions that cover their employees, AFGE and the National Association of Government Employees, have been involved in GEAR implementation and made contributions to NCA s approach to GEAR. Coast Guard officials said the agency met with union representatives for several extensive discussions involving facilitators and brain-storming sessions, in order to include union input in the final GEAR implementation plan. As a result of these discussions, Coast Guard officials told us that the agency has the approval of the union and that both parties are mutually responsible for the successful implementation of GEAR. Representatives from labor unions that we interviewed generally agreed that the GEAR pilot agencies had briefed them during GEAR implementation. Finally, although the five pilot agencies have defined different benefits that they hope to achieve through implementing GEAR, some common benefits include improved performance management overall, better engagement between employees and supervisors, and improved communication throughout the agencies. Opportunities Exist to Capture Lessons Learned for Future Implementation Efforts The GEAR pilot agencies have demonstrated leadership over their own implementation efforts. Our work with the pilot agencies identified lessons learned both from implementation within their agencies, and from hearing about the experiences of others including the following: Page 16

Strong agency leadership support from the beginning helped provide needed attention and focus upon implementation efforts. For example, DOE s Secretary sent a memo to all DOE employees stating his personal support for the LMR Council GEAR report and the agency s commitment to the pilot effort. Early stakeholder involvement with employees, management, executive team and unions resulted in greater transparency and fewer obstacles during implementation. For example, NCA officials told us that two labor unions that have been involved in GEAR implementation contributed valuable input that enhanced the agency s approach to GEAR such as suggesting that exceptional performance be defined in performance plans. Timing GEAR implementation to coincide with the beginning of the annual performance cycle in order to better track changes resulting from GEAR. For example, Coast Guard officials told us that they decided to implement GEAR at the start of their annual performance cycle, based on the experience of another pilot agency that implemented GEAR within a cycle and faced greater difficulty because of their timing. Administer employee surveys prior to implementation to identify the greatest needs and to establish a baseline to better track results. For example, Coast Guard administered a survey to its Base Boston employees to solicit their thoughts, experiences, and assessment of the current state of the employee performance management systems. Leverage shared training opportunities across agencies to conserve limited resources. For example, OPM officials told us that they worked with the Office of the Director of National Intelligence to make a suite of performance management web courses available to all agencies free of charge. Incorporate supervision as part of an agency s performance expectations. For example, according to DOE officials, they developed a mandatory supervisory element which holds supervisors accountable for each phase of the performance process. Allow additional time for supervisors to meet their requirements. For example, HUD instituted quarterly in-service days for managers for the purpose of focusing on communication and employee feedback. Page 17

Ensure continued momentum for implementation by accepting GEAR as a long-term culture change commitment. For example, HUD officials told us that agency leadership is committed to cultural transformation and the time required to accomplish it. As the pilot agencies continue with their implementation plans, additional lessons may be learned. As we stated earlier in this report, OPM and the CHCO Council officials have not yet identified a plan following the completion of the diagnostic toolkit to capture additional lessons learned. Some Agencies GEAR Project Plans Were More Complete than Others As we concluded in May 2012, a well-developed and documented project plan can help ensure that agencies are able to gauge progress, identify and resolve potential problems, and promote accountability at all levels of the project, increasing the likelihood of successful implementation. 22 Project planning is the basis for controlling and managing project performance, including managing the relationship between cost and time. 23 As we have previously concluded, preparing a project plan encourages agency managers and stakeholders to systematically consider what is to be done, when and how it will be done, what skills will be needed, and how to gauge progress and results. 24 Agency approaches to such planning can vary with each agency s particular needs and mission. Nevertheless, existing best practices stress the importance of accountability and sound planning for any project. 25 Inherent in such planning is the development and use of a project management plan that describes, among other factors, the project s objectives, implementation actions, lines of responsibility, estimated schedule for development and implementation, and performance measures. Having accurate and transparent project cost and schedule information is also essential to effective oversight. Each of the pilot agencies developed a GEAR project plan that outlined specific actions. Other elements (such as schedules and roles and 22 GAO-12-120G. 23 GAO-12-120G. 24 GAO, Securities and Exchange Commission: Progress Made on Strategic Human Capital Management, GAO-06-86 (Washington, D.C.: Jan. 10, 2006). 25 GAO-12-120G. Page 18